Rwanda is not on track to achieve most of the Millennium Development Goals at a time when hopes for scaled-up aid are mixed with concerns that, in the context of the global economic crisis, aid instead will be scaled down.
... See More + This paper analyzes the effects of alternative scenarios for grant aid, government spending allocations (between infrastructure, agriculture, and human development), and government efficiency. The authors use an economy-wide model for development strategy analysis, Maquette for Millennium Development Goal Simulations. Under a plausible scenario for increased aid, annual growth in gross domestic product increases by as much as 0.6 percentage points relative to a baseline with a growth rate of 6 percent; by 2020, the headcount poverty rate declines to 32 percent, 3 percentage points lower than for the baseline. A plausible scenario for reduced aid leads to a symmetric growth reduction but a more pronounced increase in poverty, at 40 percent in 2020. When aid increases, the most positive growth and poverty reduction impacts occur if spending increases are allocated to infrastructure and agriculture; progress in human health and education is significant but weaker than if additional spending is focused on these areas. Given synergies and diminishing marginal returns from expansion in a limited area, the scenarios that may appear most attractive and politically feasible have a broad and balanced expansion across government functions, promoting both growth and human development.
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This paper summarizes the findings of a recent study undertaken to help the Government of Rwanda bring about the robust level of agricultural growth needed to achieve the national policy objectives.
... See More + Some in Rwanda advocate the promotion of export crops, both traditional (e.g., coffee, tea, pyrethrum, hides, and skins) and non-traditional (e.g., cut flowers, fruits, vegetables, essential oils, vanilla, silk, and macadamia). Others argue that agricultural growth can best be stimulated in the short- to medium-term by raising productivity in food staples, including crops and livestock. This debate, which mirrors those ongoing in many other developing countries in sub-Saharan Africa and elsewhere, is examined in the Rwandan context through the use of a multi-market model that simulates the results of alternative policy measures to promote increased yields for key crops. The results show that in an agrarian economy such as Rwanda's in which a large proportion of rural households continue to engage in production of food staples destined for home consumption, investments that raise the productivity of food staples are likely to have a much greater impact in the short to medium term in fostering broad-based, pro-poor growth than investments that raise the productivity of export crops.
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This paper uses the Rwandan Industrial and Mining Survey (RIMS), a joint exercise between the World Bank, and the institute of statistics, ministry of finance and economic planning of the Government of Rwanda (GoR), to examine the constraints faced by the industrial sector in Rwanda.
... See More + The RIMS survey was undertaken between January and March 2006, with survey data covering the period 2004. A total of 111 establishments were surveyed, of which about 26 establishments were randomly sampled from the mining sector. Analysis of the data showed that the overall growth potential of the manufacturing sector depends on removing the constraints posed by high electricity, transport and finance costs. Close to 75 percent of respondents reported owning or sharing a generator. For these firms, an average of 45 percent of their power comes from these generators. Due to costs of fuel and upkeep, however, fewer generators are owned by smaller firms, domestically owned firms, and firms that do not participate in international markets (non-exporters). The cost of finance (interest rate, fees, etc.) was identified as a constraint by 54 percent of firms surveyed, and as a major or severe obstacle to doing business by 34 percent of firms. Smaller firms are more credit constrained than larger firms, given the need for collateral to obtain a loan. Therefore, financing is a constraint for micro and small enterprises. Further, larger firms are charged an average of 14 percent for overdraft facilities or lines of credits, while micro and small firms are charged an average of about 17 percent. Aside from the poor state of infrastructure, availability of skilled labor is reported to be a major constraint by 40 percent of firms, and the high returns to education suggests there is a skills deficit in the sector.
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Trade, financial, and exchange rate reforms are shown to have exerted a positive impact on the growth of total factor productivity in Rwanda during the period 1995-2003.
... See More + Based on a constant returns-to-scale Cobb-Douglas production function, this paper regresses total factor productivity on indices of trade, financial, and exchange rate reforms. The analysis determines that trade reforms and financial reforms each contributed positively to improvements in total factor productivity. The data also suggest that the allocation of official development assistance to human capital made a significant contribution to productivity. In contrast, the appreciation of the real exchange rate of the late 1980's hindered productivity or the growth of TFP. Taken together, the findings for Rwanda presented in this paper show that the strong growth of the past decade has not just been due to a "bounce back" effect following the genocide. The results support the notion that policies favorable to trade development, a deepening of the financial sector, and formation of human capital have been effective for increasing aggregate productivity of the economy and stimulating growth in Rwanda. For sustained growth, the Rwandan authorities should continue to build on these policies, while also taking care to maintain an appropriate exchange rate.
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The Poverty Reduction Strategy of the Government of Rwanda seeks to unlock the growth and poverty reduction potential of the tea sector through the privatization of tea estates.
... See More + This paper uses the logic of causal inference and data from the 2004 Quantitative Baseline Survey of the tea sector to assess the potential impact of the privatization program. This entails a normalized comparison of productivity outcomes to account for household heterogeneity in terms of observable and non-observable determinants of these outcomes. The paper also compares living standards between tea and non-tea households. Three main findings emerge from the analysis. Productivity outcomes are generally better in the private sector than in the public sector. Male-headed households outperform female-headed households along all dimensions considered here. And tea households tend to be better off than non-tea households.
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The inflow of large quantities of foreign aid into Rwanda since 1994 can have potential adverse effects such as aid dependency via a significant negative effect on tax efforts and on public investments.
... See More + This paper carries out a theoretical and empirical study to examine these issues. The theoretical part develops a model in which the recipient government decides on the optimal level of tax and optimally allocates total government revenue between current expenditure and public investment. The theoretical model makes it possible to empirically test whether an increase in aid is likely to reduce the optimal tax rate and the proportion of public expenditure allocated to public investment. The econometric analysis uses time series data on Rwanda to show, in line with other studies in the literature, a negative relationship between increased aid and the tax rate; but the magnitude of the effects are extremely small. In the case of Rwanda, reforms to the tax administration and expansion of the tax base have had mitigating effects. As far as the effect on public investment, the overall effect was negative in the past; however, since 1995 the direction of this effect has changed.
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The paper examines wage and income differences between men and women in Rwanda, to determine the extent to which observed patters are due to differences in education and expertise.
... See More + It examines this issue with particular attention to the agriculture and service sectors which together constitute roughly 80 percent of GDP and have been the key sectors of growth, over the past decade. The paper finds that a significant portion of workers are engaged in unpaid work, and women appear to be over represented in this category. The paper also finds that there are significant differences in earnings between men and women, and that these differences persist, even after controlling the socio-economic factors, The paper discusses these results and offers policy recommendations to help reduce these differences.
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This sourcebook was written to assist low-income countries with the development and strengthening of their poverty reduction strategies. This book has been designed as a resource for analysis and discourse on poverty reduction policies and programs at the country level.
... See More + Each chapter adopts a layered approach, with a short summary providing overall assistance on issues, a detailed guide providing approaches to analysis and policy development along with supporting materials including country case studies, technical notes, and recommendations for further reading. The book is organized into two volumes. The first focuses on core techniques including poverty measurement and analysis, and monitoring and evaluation. Cross-cutting issues, such as participation, governance, and gender, are also discussed. Volume two concentrates on macroeconomic and sectoral approaches including: rural and urban poverty, human development, and the private sector and infrastructure.
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This sourcebook was written to assist low-income countries with the development and strengthening of their poverty reduction strategies. This book has been designed as a resource for analysis and discourse on poverty reduction policies and programs at the country level.
... See More + Each chapter adopts a layered approach, with a short summary providing overall assistance on issues, a detailed guide providing approaches to analysis and policy development along with supporting materials including country case studies, technical notes, and recommendations for further reading. The book is organized into two volumes. The first focuses on core techniques including poverty measurement and analysis, and monitoring and evaluation. Cross-cutting issues, such as participation, governance, and gender, are also discussed. Volume two concentrates on macroeconomic and sectoral approaches including: rural and urban poverty, human development, and the private sector and infrastructure.
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The authors examine how the food stamp program affected measures of poverty during devaluation of the Jamaican dollar in the early 1990s. They find that without the food stamp program, the poverty gap in Jamaica would have been much worse, especially in 1990 and 1991.
... See More + For the country as a whole, not having a food stamp program wouldn't have affected the incidence of poverty significantly, but particular groups among the poor would have fared worse. Households with elderly residents benefited most from the program. Households with young children benefited more than households without, in terms of the poverty headcount and gap. The program also appears to have had more effect on extremely poor households than on those of the transient poor (people who move in and out of poverty). Explicitly incorporating behavioral responses into the model reduces the contribution of food stamps to household consumption and poverty, but the poorest benefited most from the program even after accounting for behavioral responses. The program contributed more to reducing poverty than to smoothing consumption.
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The main objectives of this book are to review the conceptual issues that arise when choosing among safety-net programs; analyze how country- and region-specific constraints help to explain why different approaches are successful in different countries and regions; synthesize the lessons learned from experience; and offer some promising best practice examples.
... See More + The study's scope is limited to social assistance and poverty-targeted programs, of which there are two kinds: programs with and without work requirements. Chapter 2 outlines the issues pertaining to targeting and the accompanying trade-offs between cost and efficiency. Chapter 3, 4, and 5 discuss country experience with cash transfers, in-kind transfers, and income-generation programs. Three common issues are: how successfully the program reached the poor, how cost-effectively they reached the poor, and whether or not the programs were able to avoid adverse incentive for work, labor supply and private saving. Chapter 6 evaluates the design issues and delivery mechanisms generic to all programs, and develop a fourfold typology of program delivery. This chapter also examines how social funds generate different outcomes depending on which delivery mechanism is chosen. Chapter 7 analyzes the issues involved in financing safety-net programs, reviewing the limited empirical information. Chapter 8 analyzes aspects of political economy through a country case-study approach. Countries studied include Bolivia, Chile, El Salvador, Ghana, Mexico, Peru, Poland, Senegal, Ukrain, and Zambia. Chapter 9 sums up the principal lessons from cross-country experience, and delineates the issues that should be borne in mind when choosing or designing programs.
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Since 1990, the transformation of the Mongolian economy from a centrally planned social system to a market economy has been impressive, although difficult.
... See More + Economic measures of stabilization and reform have led to a decline in inflation, and a projected increase in Gross Domestic Project (GDP) growth rate. However, the contraction in government spending, and the privatization of the livestock sector, both of which have accompanied the transition, has led to the emergence of a new underclass of ultrapoor families: nomadic herding families with few livestock; the unemployed; and female headed households. This report traces the principal routes through which the transition has given rise to these new vulnerable groups. It traces the increases in proportions of the poor during the period immediately following the transition. In light of these changes, the effectiveness of the current safety net programs are reviewed. The review focuses on the adequacy, equity, and efficiency of actual expenditures allocatd to the different categories of vulnerable groups; and on indicators for targeting. Domestic efforts and donor contributions are also assessed, to the extent that data permit. The report concludes with an outline of a policy framework for a reformed social assistance program in Mongolia.
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